Question

Discuss which asset, your BHP BILLITON stock or the market index (S&P/ASX200), is more sensitive to the changes in economic conditions.

between 2015 -2020

Answer 1

An assets faces the risk of economic conditions. The economic conditions may affect the assets. An economic condition is the external factor which affects the all. But there may be more affect on the individual stock if the conditions goes negative to it. There may be less sensitivity to a market index. As the market index is composed of different stock from different industry and so overall return may be kept intact. So, for changes in economic condition, the individual stock is more sensitive than maket index.